TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Tuesday, April 11, 2017

The IRS Scandal, Day 1433: House Oversight Committee Republicans Call On President Trump To Fire Commissioner Koskinen

IRS Logo 2Townhall, House Oversight Committee: President Trump, Remove IRS Commissioner John Koskinen:

Republicans on the House Oversight Committee, including Chairman Jason Chaffetz, have sent a letter to the White House demanding IRS Commissioner John Koskinen be removed from office.

"By applying additional rigorous scrutiny and unjustifiable, interminable delays to their applications for tax-exempt status, our own government betrayed the fundamental principles of liberty, free speech and democracy for partisan political reasons," the letter states. "So long as the IRS commissioner is a man who has misled the people, destroyed evidence, and failed his legal duties to the people's representatives in Congress, the IRS is not 'controlled by the people.'  For that reason, we request you immediately remove Koskinen." 

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April 11, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Saturday, April 8, 2017

The IRS Scandal, Day 1430: At Least 1 Top Republican in Congress Really Likes Commissioner Koskinen

IRS Logo 2Salt Lake City Tribune, At Least 1 Top Republican in Congress Really Likes IRS Head: Orrin Hatch:

At least one powerful Republican in Congress really likes IRS Commissioner John Koskinen. Utah's Orrin Hatch might be the only one.

Hatch gave Koskinen a warm welcome at a Senate hearing Thursday, a day after House Republicans asked President Donald Trump to fire him. "I personally appreciate the work that you have done over the years," Hatch, the Senate's senior Republican and chairman of the powerful Finance Committee, told Koskinen. "I appreciate the service you have given to this wonderful country."

At the other end of the spectrum is another Utah Republican. Rep. Jason Chaffetz has been Koskinen's most fervant detractor, repeatedly seeking his resignation and even calling for his impeachment. Chaffetz not only relentlessly pursued the IRS leader from his perch as House Oversight and Government Reform chairman, but he even testified against him as a witness before the House Judiciary Committee, claiming Koskinen has misused his power, lied and withheld records.

Unprompted, Hatch said he has a good relationship with Koskinen. It's an influential statement of support because Hatch serves as Senate president pro tem — making him third in line to succeed the president. Hatch also led the Senate Finance Committee investigation of allegations the IRS targeted conservative groups for audits, and said Koskinen cooperated.

But Hatch's backing may not be enough to counter the ire against Koskinen from other Republicans, some of whom want him to step down before his five-year-term ends in November.

On Wednesday, 15 GOP members of the House Ways and Means Committee said trust in the IRS has hit rock bottom. They said that under Koskinen, the IRS destroyed evidence when Congress was investigating the tax agency for inappropriately singling out conservative groups for extra scrutiny. ...

Koskinen said he has not heard from anyone in the Trump administration about stepping down.

But in tense exchange at Thursday's hearing, Sen. Pat Roberts, R-Kan., asked Koskinen if he intends to finish his term. "It gives me no pleasure and some degree of sadness," Roberts said. "I have been disappointed in your record at the agency."

Koskinen replied, "I regret that you're disappointed in the performance." Koskinen went on to defend his record. He said the IRS has implemented every recommendation from every investigation into the IRS handling of conservative groups. He said no one at the tax agency hindered any of the investigations.

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April 8, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Friday, April 7, 2017

NY Times:  100,000 Taxpayers Compromised In Hack Of FAFSA Tool At IRS

FAFSAIRSFollowing up on my previous post, As Deadlines Approach For College Financial Aid & Income-Based Loan Repayment, IRS Leaves Parents, Students & Graduates In Lurch By Taking Down Online Tax Return Data Retrieval Tool:  New York Times, Up to 100,000 Taxpayers Compromised in Fafsa Tool Breach, I.R.S. Says:

The Internal Revenue Service said on Thursday that the personal data of as many as 100,000 taxpayers could have been compromised through a scheme in which hackers posed as students using an online tool to apply for financial aid.

The breach may be the most extensive since 2015, when thieves gained access to the tax returns of over 300,000 people by using stolen data and filed fraudulent returns to get refunds.

The possibility of an attack became known in early March after the I.R.S. shut down its Data Retrieval Tool, which families used to import tax information to Fafsa, the Free Application for Federal Student Aid, on the Education Department’s website. The shutdown, at the height of financial aid application season, caused outrage among parents and students trying to fill out the complicated Fafsa forms.

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April 7, 2017 in IRS News, Tax | Permalink | Comments (3)

The IRS Scandal, Day 1429:  Commissioner Koskinen Says He Will Finish Term Despite GOP Calls To Step Down Immediately

IRS Logo 2The Hill, IRS Chief Says He's Committed to Finishing His Term:

IRS Commissioner John Koskinen on Thursday said he is committed to finishing his term, one day after Republicans on the House Ways and Means Committee called for his removal.

“I signed up for a term that ends in November,” Koskinen said at a Senate Finance Committee hearing. “Where I come from, if you sign up for a commitment, you complete that commitment.”

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April 7, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Thursday, April 6, 2017

FAIR Seeks Revocation Of The Southern Poverty Law Center’s Tax Exemption Due To Its Anti-Trump Electioneering

SPLCPress Release, FAIR Files Formal Exhaustive Complaint with the IRS: SPLC Violated Its Tax Exempt Status Repeatedly in the Last Election Cycle Alleges FAIR:

According to a formal legal complaint filed today with the Internal Revenue Service (IRS), the Southern Poverty Law Center (SPLC) openly and repeatedly violated its non-profit tax status nearly 50 times during the 2016 presidential election cycle, participating in communication activities prohibited by the IRS in a “flagrant, continued and intentional campaign” targeting then-Presidential candidate Donald J. Trump and other Republican candidates. The complaint was filed by the Federation for American Immigration Reform (FAIR) through its legal affiliate the Immigration Reform Law Institute (IRLI). Copies are available here.

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April 6, 2017 in IRS News, Tax | Permalink | Comments (1)

TIGTA:  91% Of Taxpayers Whose Bank Accounts Were Seized By The IRS Had Acquired The Cash Legally

TIGTAThe Treasury Inspector General for Tax Administration yesterday released Criminal Investigation Enforced Structuring Laws Primarily Against Legal Source Funds and Compromised the Rights of Some  Indiviuals and Businesses:

The Currency and Foreign Transactions Reporting Act of 1970, referred to as the Bank Secrecy Act, requires U.S. financial institutions to file reports of currency transactions exceeding $10,000. ... In October 2014, a new policy was instituted by IRS Criminal Investigation (CI) that it would no longer pursue the seizure and forfeiture of funds related to legal source structuring. In the same month the policy changed, the New York Times reported that CI had been seizing funds in structuring investigations without filing a criminal complaint. Property owners were left to prove their innocence, and many gave up trying. This audit was initiated to evaluate the IRS’s use of seizures against property owners suspected of structuring transactions to avoid Bank Secrecy Act reporting requirements.

Most of the seizures for structuring violations involved legal source funds from businesses. While current law does not require that the funds have an illegal source (e.g., money laundering or criminal activity other than alleged.

Washington Post, The IRS Took Millions From Innocent People Because of How They Managed Their Bank Accounts, Inspector General Finds:

The IRS pursued hundreds of cases from 2012 to 2015 on suspicion of structuring, but with no indications of connections to any criminal activity. Simply depositing cash in sums of less than $10,000 was all that it took to arouse agents' suspicions, leading to the eventual seizure and forfeiture of millions of dollars in cash from people not otherwise suspected of criminal activity.

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April 6, 2017 in Gov't Reports, IRS News, Tax | Permalink | Comments (11)

The IRS Scandal, Day 1428:  Fifteen Ways & Means Committee Republicans Urge Trump To Fire Commissioner Koskinen

IRS Logo 2Letter From 15 House Ways & Means Committee Republicans to President Trump (Apr. 5, 2017) (press release):

As members of the House Ways and Means Committee, we believe it is imperative that the Internal Revenue Service (IRS) work for the best interest of all taxpayers, and that the taxpayers in tum have confidence in the IRS's ability to fairly administer the tax code. This trust is at the core of our system of voluntary tax compliance . Trust in the IRS is hitting rock-bottom under IRS Commissioner John Koskinen . Not only was key evidence relevant to this Committee's investigation destroyed under his watch, but he also misled Congress in the process, intentionally degraded customer service at the agency, and has since lost the trust of the American people. We believe that trust cannot be fully restored under Commissioner Koskinen's leadership. For this reason, we are writing to request the removal of John Koskinen as Commissioner of the IRS and to request that a new leader be put in place as soon as possible.

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April 6, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Wednesday, April 5, 2017

The IRS Scandal, Day 1427:  54 Applications For Tax-Exempt Status Were Rejected In 2016; One Conservative Group Has Been Waiting For An Answer Since 2009

IRS Logo 2Washington Free Beacon, IRS Denied Tax-Exempt Status to 37 Religious, Charitable Groups in 2016: One Group Has Been Waiting For Tax-Exempt Status For More Than Seven Years:

The Internal Revenue Service denied tax-exempt status to 37 religious, charitable, and educational organizations in 2016, according to recent data from the agency.

The IRS rejected a total of 54 applications for tax-exempt status in 2016. Groups applying for 501(c)3 status, which applies to non-profits whose mission is religious or charitable in nature, comprised 69 percent of denials.

Nearly 85,000 groups applied for 501(c)3 status in 2016. Of those applications, 79,545 were approved, 37 were denied, and 5,006 were not adjudicated. According to the IRS, the 5,006 applications that were not adjudicated in 2016 were either withdrawn by the organization, did not include required information, were incomplete, or were IRS correction disposals. ...

As early as 2010, the IRS began targeting applicants for tax-exempt status based on their political ideology, delaying the applications of some Tea Party and conservative groups before the 2012 presidential election. To this day, some groups are still waiting for their tax-exempt status to be approved.

Attorney Jordan Sekulow, executive director of the American Center for Law and Justice, represents 37 conservative and pro-life nonprofit organizations encountered opposition from the IRS in getting their tax-exempt status approved. One of these groups is still waiting for determination after filing for tax-exempt status in December 2009, which means it has been waiting for more than seven years. ...

Sekulow said IRS Commissioner John Koskinen, who has led the agency since 2013, needs to be replaced by someone who Congress and the American people can trust. "We've had a very firm position at the ACLJ, we believe that there needs to be total reform at the IRS, and the institution is incapable of self-correcting," Sekulow said. "That means people like Koskinen and a lot of the bureaucrats like Lois Lerner that run the [exempt organizations division] and the different departments within the IRS need to be changed."

Sekulow said Koskinen missed an opportunity to clean up the IRS and was too protective of the agency and its officials. Koskinen's term ends at the end of November 2017, though he said late last year he would resign at the request of President Donald Trump. Sekulow said added pressure from Congress to impeach the commissioner could encourage Trump to take him up on his offer. ...

"You shouldn't have to be afraid that the IRS will target you because of your political beliefs or your religious beliefs," he said. "So that's why we believe continued pressure from Congress, I think, President Trump would appreciate that because it would give him the momentum to make that decision and it would work in tandem. You would have Congress calling for it and the president taking action on it."

The IRS did not respond to requests for comment.

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April 5, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, April 4, 2017

The IRS Scandal, Day 1426: Obama’s IRS Chief Who Dodged Impeachment Continues Under Trump

IRS Logo 2Daily Signal, Obama’s IRS Chief Who Dodged Impeachment Continues Under Trump:

In the heart of tax season, Internal Revenue Service Commissioner John Koskinen will address the National Press Club next Wednesday even as many members of Congress question why someone who dodged impeachment during the Obama administration continues to be the face of the tax collecting agency under President Donald Trump.

“It could be partly that for the checklist of the Trump administration, they don’t yet have a full Cabinet and this isn’t a priority. External pressure, from what I picked up, should continue,” Jordan Sekulow, executive director for the American Center for Law and Justice, a conservative legal group, told The Daily Signal. “If we saw more pressure from Congress, I think Koskinen would be gone.”

Koskinen’s five-year term ends in November, unless he is removed. Though Koskinen wasn’t in office when the IRS targeted tea party and conservative groups, House Republicans said he was repeatedly uncooperative and misled congressional investigators. Koskinen has said he acted in good faith to cooperate with the investigation. ...

In January, shortly after Trump took office, 53 House Republicans—led by Republican Study Committee Chairman Mark Walker of North Carolina—asked Trump to remove Koskinen.

Walker spokesman Jack Minor told The Daily Signal Thursday the congressman stands by the letter, which House Oversight and Government Reform Committee Chairman Jason Chaffetz, R-Utah; Judiciary Committee Chairman Bob Goodlatte, R-Va.; and House Freedom Caucus Chairman Mark Meadows, R-N.C.; also signed. ... Chaffetz’s opinion hasn’t changed that Koskinen should not only be removed from office, but should forfeit his government pension, M.J. Henshaw, spokeswoman for the House Oversight and Government Reform Committee, told The Daily Signal Thursday.

Last week, Cause of Action Institute, a conservative government watchdog group, issued a report asserting the IRS can engage in politicized targeting again under a section of the internal revenue manual. The report called for the Trump administration to roll back the rule.

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April 4, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Monday, April 3, 2017

David Kautter To Be Named Assistant Secretary For Tax Policy

KautterPolitico reports that David Kautter is slated to be named President Trump's Assistant Secretary for Tax Policy, succeeding Mark Mazur (who left the position in February to become Director of the Tax Policy Center) and Acting Assistant Secretary for Tax Policy Thomas West.  From his webpage at American University's Kogod Tax Center:

David Kautter is Managing Director of the Kogod Tax Center and Executive in Residence in the Department of Accounting and Taxation. He joins Kogod following a distinguished career as a partner at Ernst & Young LLP, where he held a number of key technical and leadership roles spanning over three decades.

Most recently, Kautter served as Ernst & Young's Director of National Tax, the chief operating executive for the firm's national tax practices.

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April 3, 2017 in IRS News, Tax | Permalink | Comments (0)

Sunday, April 2, 2017

The IRS Scandal, Day 1424:  Conservatives Demand IRS Commissioner’s Head In White House Meeting

IRS Logo 2Daily Caller, Conservatives Demand IRS Commissioner’s Head In White House Meeting:

An off-the-record White House meeting with roughly two dozen conservative leaders Wednesday included explicit calls for President Trump to fire IRS Commissioner John Koskinen, according to a source in the room.

White House conservative liaison Paul Teller organized the meeting Wednesday between Trump staffers and leaders of conservative groups such as the Heritage Foundation and Judicial Watch.

Talk of Koskinen’s firing was part of a larger discussion on clearing out Obama-era personnel from the executive branch where possible, the source said. The broad consensus among attendees was that Trump needs to clean out Obama-era bureaucrats if he is going to be successful in pushing through his agenda.

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April 2, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Friday, March 31, 2017

IRS Releases FY 2016 Data Book

IRS Data BookIR-2017-69 (Mar. 30, 2017), IRS Releases FY 2016 Data Book:

The Internal Revenue Service today released the 2016 IRS Data Book, a snapshot of agency activities for the fiscal year.

The 2016 IRS Data Book describes activities conducted by the IRS from Oct. 1, 2015, to Sept. 30, 2016, and includes information about returns filed, taxes collected, enforcement, taxpayer assistance, the IRS budget and workforce as well as other data.

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March 31, 2017 in IRS News, Tax | Permalink | Comments (0)

Thursday, March 30, 2017

Trade Group: IRS Wastes 22% Of Its Budget ($2.76 Billion) On Information Technology

IRS Logo 2International Association of IT Asset Managers,  IT Waste at the Internal Revenue Service:

IRS IT Spending/Waste By The Numbers:

  • $11.2 billion - Total IRS budget in 2016. 
  • 79,890 - Total IRS employees as of FY2015.
  • $4,600-$4,900 - Average amount spent per employee on IT in the private sector.
  • $37,051 - Average amount spent per employee on IT at the Department of Treasury.
  • $31,000 - According to IAITAM, private sector-style IT Asset Management protocol implementation would save roughly $31,000 per employee at the IRS. 
  • More than three times – How much the potential ITAM-related savings per employee stack up in comparison to the average $9,118 federal income tax bill for Americans.
  • 22 percent - Total potential ITAM-related savings would add up to $2.76 billion
    or nearly one quarter of the total 2016 IRS budget.

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March 30, 2017 in IRS News, Tax | Permalink | Comments (12)

The IRS Scandal, Day 1421: More On A Hidden Cause Of The IRS Scandal

Cause of ActionFox News, IRS Still Allowed to Target Political Groups, According to Watchdog Org:

The IRS is still able to target certain political groups despite being publicly exposed for the unfair practice more than five years ago, according to a new report by a watchdog group.

A rule in place at the IRS allows the federal agency to delay the applications of non-profit groups looking for tax-exempt status, claims the Washington-based Cause of Action in its report, A Hidden Cause of the IRS Targeting Scandal. The IRS admitted in 2013 that leading up to the 2012 election the agency unfairly targeted right-leaning groups as well as those with “Tea Party” or “patriot” in their name. More than five years after the practice was exposed, Cause of Action says the IRS has not made changes to end the practice. “The regulation that allows them to do this is still there,” John Vecchione, executive director of Cause of Action told Fox News. “It’s bureaucratic inertia until someone makes a change.”

The findings claims the IRS is able to target these groups while still complying with its own rules. Cause of Action claims changing this practice would be a simple and quick fix. “The IRS has the authority to change its internal policy at any moment, which means it can remove the problematic rules at its discretion,” the authors of the report said in their findings. “Doing so would eliminate the agency procedure than enabled the targeting scandal. To date, the agency has not made the required changes to its rules.”

Officials for the IRS refute the report’s claims. “The IRS strongly disputes the report and any suggestion or allegation that Exempt Organizations is targeting taxpayers,” reads a statement provided to Fox News. “The IRS emphasizes that this point has been confirmed by independent third parties, including the Treasury Inspector General for Tax Administration.”

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March 30, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Wednesday, March 29, 2017

The IRS Scandal, Day 1420: A Hidden Cause

Cause of ActionCause of Action, Sensitive Case Reports: A Hidden Cause of the IRS Targeting Scandal:

Executive Summary:
Beginning in February 2010, the Internal Revenue Service (“IRS’) singled out certain non-profit organizations for extra scrutiny when they applied for tax-exempt status. Numerous subsequent congressional investigations and media reports demonstrated that the targeting involved invasive questioning and years-long delays, and focused disproportionately on right-leaning groups, especially those with “Tea Party” in their name. These reports, however, have almost entirely overlooked a hidden cause of the targeting scandal,which remains in effect today. As a result, American taxpayers are at risk for similar treatment in the future.

Contrary to the conventional storyline, there exists an institutional policy that was the first impetus in prompting IRS employees to target groups based on their political viewpoints. That policy is embodied in an internal IRS rule—which is still on the books—that singles out applications from any group interested in issues that might garner attention from either the media or Congress. In such cases, the merits of the application are ignored as IRS employees develop “Senstive Case Reports” for consideration by those above them in the IRS hierarchy. The result is a process that interferes with the unbiased review of applications for tax-exempt status designed to apply to all eligible organziations, regardless of their political viewpoints or affiliations.

Seven years after the targeting scandal began, the rule that enabled this inexcusable behavior still exists. Until that rule is removed from the internal manual used by all IRS employees, targeting of politcal opponents will remain a very real threat. Fortunately, removing the offending provisions is a simple process that can be started at any time and completed without the need for new legislation or formal notice-and-comment rule-making.

Findings:

  • Targeting was—and is—IRS policy, not a violation of it.
  • The employees who initiated the targeting cited an internal “Sensitive Case Report” process that singled out applications that might attract media or congressional attention.
  • Sensitive Case procedures remain in effect today.
  • The IRS has the authority to change its internal policy at any moment, which means it can remove the problematic rules at its discretion. Doing so would eliminate the agency procedure that enabled the targeting scandal. To date, the agency has not made the required changes to its rules.

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March 29, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Sunday, March 26, 2017

The IRS Scandal, Day 1417:  Satan, Tea Parties, and the IRS

IRS Logo 2Sam Brunson (Loyola-Chicago), Satan, Tea Parties, and the IRS:

Did you hear that the IRS granted a Satanic cult tax-exempt status in ten days?!? Meanwhile, Tea Party groups’ exemption applications languished for months or even years?!?

I know, it sounds pure conspiracy theory: the IRS loves Satan and hates conservatives. But it’s true! Or, at least, kind of! But it needs to be contextualized, because comparing the exemption application of Reason Alliance, Ltd. (the putative Satanic cult) and Tea Party groups is inapposite.

First things first, though: the framing of this “controversy” is purely a product of the Outrage Industrial Complex, as represented by Fox News and Judicial Watch. And I’m sure the invocation of “Satanic cult” is going to get them clicks and shares. But Satanic cult? The Reason Alliance is the tax-exempt offshoot of The Satanic Temple, which strikes me as basically a relatively-clever piece of performance art meant to object to religions enjoying tax-exempt status, and which otherwise functions as a much funnier, and more self-aware, version of the Freedom From Religion Foundation and Americans United for the Separation of Church and State. Because The Satanic Temple objects to religions’ exemption from taxation, it has chosen not to pursue tax-exempt status itself. Apparently, though, in the interest of facilitating donations from individuals whose charitable giving is more elastic, it created the Reason Alliance to permit deductible charitable giving.

But the substance of the outrage here isn’t Satan; rather, it’s that Satan could essentially bypass the line (of Tea Party groups, probably) in getting his exemption from tax. ...

But did Satan bypass the line? In a word, no. ...  The Reason Alliance filed a Form 1023-EZ. ... [T]he Reason Alliance merely chose a faster route to exemption.

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March 26, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Saturday, March 25, 2017

Amazon Beats IRS In $1.5 Billion Tax Court Case

Amazon logoSeattle Times, Amazon Wins $1.5 Billion Tax Battle With IRS:

Amazon.com scored a big victory Thursday against the IRS in a case that the company says could have cost it about $1.5 billion [Amazon.com v. Commissioner, 148 T.C. No. 8 (Mar. 23, 2017)].

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March 25, 2017 in IRS News, New Cases, Tax | Permalink | Comments (1)

The IRS Scandal, Day 1416:  The Root Problem Is The Law, Not The IRS

Hackney (2017)Philip Hackney (LSU) delivered the Norman A. Sugarman Memorial Lecture in Nonprofit Law at Case Western yesterday on Improving IRS Charity Oversight: Responsible Congressional Delegation, Responsive IRS Rulemaking:

Whether you think it fair or unfair, there is a large segment of American society who believes the IRS targeted conservative groups trying to obtain tax-exempt status from at least 2011-2013, leading to explosive accusations on the professional integrity and political bias of the agency.

In this lecture, Professor Hackney, James E. & Betty M. Phillips Associate Professor of Law, LSU Law Center, will clarify how this charge is unfair or at the least deeply misguided, explaining that root problem is not the alleged political litmus test by the IRS in considering tax exempt status in the charitable sector, but rather the law — both in its construction and implementation.

Congress has provided vague legal standards for the IRS to implement in the tax exempt arena, resulting in costly enforcement attempts that have undermined the public’s confidence that the laws are being enforced in a fair and impartial manner. To solve this issue, Congress should enact standards in this arena, but that the Treasury Department and the IRS ought to implement rules.

This lecture will consider the political, legal, and technical challenges to adopting such a rule-based regime for charity oversight.

See Philip Hackney, Charitable Organization Oversight: Rules v. Standards, 13 Pitt. Tax Rev. 83 (2015).

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March 25, 2017 in IRS News, IRS Scandal, Scholarship, Tax | Permalink | Comments (5)

Friday, March 24, 2017

The IRS Scandal, Day 1415:  ‘Media Attention’ And IRS Abuse

IRS Logo 2Wall Street Journal op-ed: ‘Media Attention’ and IRS Abuse: A Simple Rule Fix Could End Partisan Targeting Tomorrow, by John J. (President & CEO, Cause of Action Institute):

The Internal Revenue Service’s targeting of Americans for their political views may have ended with the Obama administration — or even with its exposure in 2013. But it could easily recur. Even now, an internal IRS rule singles out applicants for nonprofit status who might be tied to anything newsworthy.

The genesis of the targeting scandal was Section 7.29.3 of the Internal Revenue Manual. As noted in a report my organization is issuing Wednesday, this manual dictates how IRS employees handle everything from customer service to criminal investigations. This particular section tells them to flag for further review any application for tax-exempt status that might “attract media or Congressional attention.”

That’s a broad, vague and subjective command that career IRS employees are nevertheless required to follow. Emails between IRS personnel make clear that low-level employees were guided by this rule throughout the targeting scandal. They repeatedly cited “media attention” on the Tea Party as the reason to single out and delay applications from conservative groups.

This rule means that IRS enforcement reflects the ideological biases of the media. Aside from a small number of groups related to the Occupy Wall Street movement and the defunct advocacy group Acorn, libertarian and free-market groups were almost exclusively targeted.

These provisions of the IRS manual have nothing to do with the merits of a nonprofit application and everything to do with keeping the agency from looking bad. It is inappropriate for a group’s tax-exempt status to be deep-sixed because of negative publicity. In the targeting scandal, this approach allowed partisan concerns to overtake the application process, resulting in the unfair treatment of political viewpoints at odds with the Obama administration.

Equal justice under the law demands that the IRS abandon the “newsworthy” criterion. To date, however, the agency has promised only to stop making lists of targeted groups “until further notice.” Even if the halt were permanent, it wouldn’t be enough. IRS officials are still required to follow the manual and pull high-profile applications for enhanced scrutiny.

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March 24, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Monday, March 20, 2017

Fewer Than 1,000 Taxpayers Come Clean To The IRS On Virtual Currency Transactions

Bitcoin IRSFortune, Only 802 People Told the IRS About Bitcoin—Lawsuit:

The Internal Revenue Service revealed new details about its investigation into tax evasion related to bitcoin, filing court documents that suggest only a tiny percentage of virtual currency owners are reporting profits or losses in their annual returns.

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March 20, 2017 in IRS News, Tax | Permalink | Comments (1)

The IRS Scandal, Day 1411: Why Did Donald Trump Fire Sally Yates And Preet Bharara, But Not John Koskinen?

IRS Logo 2

Washington Examiner, Why Is Trump Afraid of Draining the Swamp at the IRS and Firing John Koskinen?:

Political cartography in Washington can be difficult. After three months in office, it's clear President Trump doesn't believe the D.C. bog includes the federal building at the corner of 12th Street and Pennsylvania Avenue. He won't drain the swamp at the Internal Revenue Service.

Famous for firing people, Trump has disrupted the status quo in the nation's capital with his personnel decisions. He quickly terminated Acting Attorney General Sally Yates, then sacked 46 federal prosecutors. But he won't ax IRS Commissioner John Koskinen.

Conservatives have been gunning for the tax chief's scalp for years. To no avail, they've tried shaming, officially censuring, and impeaching Koskinen. But now that Trump's in the White House, they're wondering why the president is sheltering the taxman. ...

The Trump White House keeps dodging the question. On Friday, press secretary Sean Spicer referred curious reporters inquiring about Koskinen's fate to the Treasury Department, even after it came to light that the agency still has 7,000 unreleased documents related to the scandal. ...

Trump has every reason to dismiss the tax agent. With Koskinen at the helm, the IRS was able to cover up its targeting scandal. Brought in by President Obama to clean up the agency's image, he turned a blind eye as the IRS covered up its scandal and continued to violate citizen's First Amendment rights.

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March 20, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Sunday, March 19, 2017

The IRS Scandal, Day 1410: Judicial Watch Forces Disclosure Of New Documents

IRS Logo 2

Breitbart op-ed: Obama IRS Scandal Continues – Judicial Watch Forces IRS to Disclose New Documents, by Tom Fitton (President, Judicial Watch):

We have no intention to allow the extra-legal activities of former President Obama’s administration to fade into the sunset now that he is out of office. Particularly egregious was his use of the might of the Internal Revenue Service (IRS) to target groups that disagreed with his political views.
And heel-dragging at the IRS continues.

Last week, Judicial Watch reported that the agency informed the U.S. District Court that it located “an additional 6,924 documents of potentially responsive records” relating to our 2015 Freedom of Information Act (FOIA) lawsuit regarding the Obama IRS targeting scandal.

The lawsuit at issue sought records about the IRS selection of individuals and organizations for audits based upon applications requesting non-profit tax status filed by Tea Party and other 501(c)(4) tax-exempt organizations (Judicial Watch v. Internal Revenue Service (No. 1:15-cv-00220)). ...

The corruption at the IRS is astounding. Our attorneys knew that there were more records to be searched, but the Obama IRS ignored this issue for years.

Remember that in July 2015, we released Obama IRS documents confirming that the agency used donor lists of tax-exempt organizations to target those donors for audits. The documents also show that IRS officials specifically highlighted how the U.S. Chamber of Commerce may come under “high scrutiny” from the IRS.

In September 2014, another JW FOIA lawsuit forced the release of documents detailing that the IRS sought, obtained, and maintained the names of donors to tea party and other conservative groups. IRS officials acknowledged in these documents that “such information was not needed.” The documents also show that the donor names were being used for a “secret research project.”

The Obama IRS scandal continues, and President Trump needs to clean house at the IRS as quickly as possible.

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March 19, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Saturday, March 18, 2017

The IRS Scandal, Day 1409:  'After School Satan Club' Granted Tax-Exempt Status In 10 Days While Conservative Groups Waited Years

IRS Logo 2

Judicial Watch Press Release, IRS Gives “After School Satan Club” Tax-Exempt Status in 10 Days:

While the Internal Revenue Service (IRS) makes conservative groups wait years for tax-exempt status an “After School Satan Club” launched to hinder Christian-based counterparts got its nonprofit ranking in just ten days, records obtained by Judicial Watch show. The classification is offered to charitable, religious and educational organizations that operate as nonprofits. Under the Obama administration IRS political appointees illegally targeted conservative groups, either making them wait up to seven years for tax-exempt status or denying their application altogether. Judicial Watch uncovered that scandal and has obtained piles of government records showing how the IRS illegally colluded with another federal agency to single out groups with conservative-sounding terms such as patriot and Tea Party in their titles when applying for tax-exempt status.

In the meantime, leftist groups like the Satan club got fast tracked. The principle goal of establishing the Satan clubs in public schools throughout Washington State appears to be to counter existing enterprises operated by a Christian-based group. Documents obtained by Judicial Watch include the process of establishing an after-school Satan club at Point Defiance Elementary in Tacoma. The entity behind the club is a nonprofit called Reason Alliance, which is based in Somerville, Massachusetts, and operates in Washington State as the Satanic Temple of Seattle. Its director, Lilith X. Starr, established the Point Defiance Elementary Satanic club, the records show. In its application the club states that its purpose is “character development” and that adult instructors are vetted by the Satanic Temple’s “Executive Ministry.” Children ages 5-12 will develop basic critical reasoning, character qualities, problem solving and creative expression, according to the Satanic Temple filings included in the documents. The club logo is a pencil with devil’s horns. Records obtained by Judicial Watch from the Treasury Department show that the Satanic cult applied for tax-exempt status on October 21, 2014 and received it on October 31, 2014.

The parent permission forms ask for the name of the child’s church and pastor, the records show. They also reveal that Starr, the Seattle Satanic Temple director, told Tacoma School District Superintendent Carla Santorno that the clubs are led by “caring Satanists” and each child receives a membership card. Starr also tells the superintendent that the effort to establish after-school Satan clubs in Tacoma schools is in direct response to the Christian-based Good News Clubs operating in campuses throughout the district. This ignited concern among some Tacoma district officials, the records show. In one electronic mail exchange, Tacoma Schools official Andrea O-Brien-Henley sends colleague Paul Koch a citation from the Satanic Temple’s website noting that the temple only wants to establish after-school Satan clubs in school districts with Christian Good News Clubs. O’Brien-Henley notes that it’s odd that the Satanic Temple only targets schools that have Good News Clubs, writing to hear colleague: “If they really want to get their message out to kids it seems kind of odd that they would only be targeting schools with a Good News Club; one would think that they would want to start clubs anywhere there is an *interest* in them.”

Here’s the citation that O’Brien-Henley forwarded to fellow school district official Koch from the Satanic Temple’s website: “How do I start an After School Satan Club in my school district? If there isn’t a chapter of The Satanic Temple near you, but you’re interested in starting and After School Satan Club in your school district, please contact The Satanic Temple. Please keep in mind that the Satanic Temple is not interested in operating After School Satan Clubs in school districts that are not already hosting the Good News Club. However, The Satanic Temple ultimately intends to have After School Satan Clubs operating in every school district where the Good News Club is represented.”

In another exchange, the Executive Director of Communications for the Tacoma School District, Dan Voelpel, expresses concern to colleagues that people will confuse the school district’s message of tolerance toward the Satan Club with tolerance toward alleged “hate-related activities around the country in the wake of the presidential election.” In the records the principal of Point Defiance Elementary reveals that, two weeks after the Satan club was launched, no one had signed up for it. The fact remains however, that the IRS fast-tracked a deranged Satanic cult to operate as a nonprofit in taxpayer-funded elementary schools.

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March 18, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (8)

Friday, March 17, 2017

The IRS Scandal, Day 1408: Why Won't The Media Cover It?

IRS Logo 2

The Hill op-ed: Why Won't the Media Cover IRS Scandals?, by Jenny Beth Martin (President & Co-Founder, Tea Party Patriots):

Sometimes the most insidious attack on our individual liberty arises not from the government’s wholesale trampling on those rights, but instead from a widespread chilling effect, in which individuals “self-police” or regulate their behavior out of fear of the government’s retaliation.

The years-long IRS scandal surrounding its abuse of power when it engaged in a systematic targeting of conservatives is a powerful example of the government’s ability to initiate a chilling effect on free speech.

It has been nearly four years since the IRS admitted in May of 2013 to singling out and targeting conservative groups, especially tea party groups, for additional scrutiny, onerous paperwork, and even audits. The IRS’s abusive targeting, which lasted for years, was entirely motivated by political animus and caused untold — incalculable, even — devastation to conservatives and to conservative groups. ...

After meeting with, and speaking with, hundreds of local tea party organization members in 2013, I was convinced of three key points: 1) the IRS’s targeting scandal had had a profound impact on organizations’ abilities to attract new members, fundraise, and engage on important policy battles; 2) the chilling effect of the federal government’s actions was real, devastating, and impossible to calculate; and 3) the American public needed to know the full extent of the targeting scandal so we could ensure it would never happen again.

When news of the targeting became public, the media was completely disinterested. And, now, four years later, it seems, not much has changed with the media’s interest levels.

Just this past week, the IRS revealed that it had found nearly 7,000 documents potentially related to the targeting of tea party groups. Yes, the agency that has stone-walled Congress for four years, lost computers and hard drives and tens of thousands of emails, just discovered 6,924 documents in response to an ongoing Freedom of Information Act (FOIA) request from Judicial Watch.

Mainstream media outlets have barely reported on this latest revelation at all. And why should they? It’s only the latest chapter in a tome the media has made clear it has no intention of sharing with the American public. ...

Two hallmarks of a free society are that individuals do not have to live in fear that their political views or activities will cause them to be subjected to abuse by the federal taxing agency, and that the press holds government accountable when it becomes abusive to its citizens. It seems, in both areas, we have a lot more work to do.

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March 17, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)

The IRS Scandal, Days 1401-1500

March 17, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Thursday, March 16, 2017

The IRS Scandal, Day 1407: NY Post Editorial, Fire The IRS Chief Already, Mr. President

IRS Logo 2

New York Post Editorial, Fire the IRS Chief Already, Mr. President:

Why is IRS Commissioner John Koskinen still in office? A growing number of Capitol Hill Republicans want to know — and they have good reason to be troubled.

When he took over in 2013, Koskinen was supposed to “fix” the IRS — and in particular get to the bottom of the scandal in which the agency deliberately held up approvals for 75 conservative and Tea Party groups that had applied for legitimate tax exemptions.

Instead, what Congress and the public got from him was obstruction, open defiance and a refusal to discipline anyone at the agency. Indeed, he seemed most concerned with running interference to shield the Obama administration from any embarrassment.

Nor was he alone: The Obama Justice Department refused to bring criminal charges against anyone at the IRS. To date, no one has been held accountable for what even liberal legal icon Laurence Tribe has called “inexcusable abuse.” ...

It’s clear there’ll be no IRS reforms while Koskinen is in office. He’s the No. 1 candidate in Washington for President Trump’s signature line: “You’re fired.”

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March 16, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Wednesday, March 15, 2017

IRS Strips Tax-Exempt Status From Richard Spencer's White Nationalist Nonprofit

NPI 3Following up on my previous post, Alt-Right Group Has Not Filed Form 990s Due To IRS Error, Allowing Group's Finances To Escape Scrutiny:  Los Angeles Times, IRS Strips Tax-Exempt Status from Richard Spencer's White Nationalist Nonprofit:

The nonprofit run by one of America’s most prominent white nationalists, Richard Spencer, has lost its tax-exempt status for failing to file tax returns with the federal government, according to Internal Revenue Service records.

An inquiry by The Times also raised questions about whether Spencer had properly filed paperwork allowing the National Policy Institute to raise funds in Virginia, its primary place of business, and whether Spencer, a Donald Trump supporter, had flouted federal rules that forbid nonprofits from supporting or opposing political candidates.

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March 15, 2017 in IRS News, Tax | Permalink | Comments (2)

Monday, March 13, 2017

Second International Conference On Taxpayer Rights Kicks Off Today In Vienna

The IRS Scandal, Day 1404: Attorney General Sessions Weighs Appointing Special Counsel To Investigate Obama's Justice Department Scandals

IRS Logo 2

Hugh Hewitt, Attorney General Jeff Sessions:

Hugh Hewitt:  Now let me switch to the Department itself, Mr. Attorney General. It had a bad eight years. I’m a proud veteran of the Department of Justice, as you are. But the IRS case, the Fast and Furious case, Secretary Clinton’s server, the Department of Justice came under great criticism. How about an outside counsel, not connected to politics, to review the DOJ’s actions in those matters with authority to bring charges if underlying crimes are uncovered in the course of the investigation, and just generally to look at how the Department of Justice operated in the highly-politicized Holder-Lynch years?

Jeff Sessions:  Well, I’m going to do everything I possibly can to restore the independence and professionalism of the Department of Justice. So we would have to consider whether or not some outside special counsel is needed. Generally, a good review of that internally is the first step before any such decision is made.

Hugh Hewitt:  Will you be looking at the IRS investigation specifically, because that left many of us thinking that the Department of Justice had laid down for a terrible abuse of political power?

Jeff Sessions:  It does. That circumstance raised a lot of questions in my mind, and when I was in the Senate. So it is a matter of real concern to me.

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March 13, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Sunday, March 12, 2017

The IRS Scandal, Day 1403: Should Koskinen Remain, Resign, Or Be Fired?

Saturday, March 11, 2017

The IRS Scandal, Day 1402: IRS Locates 7,000 Documents Related To Tea Party Targeting

IRS Logo 2Washington Free Beacon, Two Years Later, IRS Locates 6,924 Documents Related to Tea Party Targeting; Agency Will Not Commit to a Timeframe to Make the Documents Public:

The Internal Revenue Service has located 6,924 documents potentially related to the targeting of Tea Party conservatives, two years after the group Judicial Watch filed a Freedom of Information Act lawsuit for them.

The watchdog group intended to find records regarding how the IRS selected individuals and organizations for audits that were requesting nonprofit tax status.

The agency will not say when it will make the documents available to the public.

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March 11, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Friday, March 10, 2017

Low Income Taxpayer Clinic Annual Report

The IRS yesterday released (IR-2017-56) Program Report and 2017 Publication 4134, Low Income Taxpayer Clinic List:

LITC

LITC Program Report
The Internal Revenue Service’s Low Income Taxpayer Clinic (LITC) Program Office has issued its annual program report, which details how LITCs have provided representation, education, and advocacy for taxpayers who are low income or speak English as a second language (ESL).

During 2015, LITCs represented 18,751 taxpayers in disputes with the IRS and provided consultation or advice to an additional 18,810 taxpayers. LITCs helped taxpayers secure more than $4.3 million in tax refunds and eliminate more than $64 million in tax liabilities, penalties, and interest.

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March 10, 2017 in IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Days 1301-1400

March 10, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Friday, March 3, 2017

NY Times:  Trump's Budget Proposes Deep Cuts In Already Depleted IRS

IRS Logo 2New York Times, Under Trump, an Already Depleted I.R.S. Could Face Deep Cuts:

President Trump has a rocky history with the Internal Revenue Service, which he has complained audits him with unfair ferocity. Now he wants to significantly cut the tax agency’s funding at a time when it has already been bleeding staff and struggling to keep up with a flood of returns ahead of Tax Day.

The plans, revealed this week in documents associated with the White House budget outline, put Mr. Trump at odds with his Treasury secretary, Steven Mnuchin, who has argued that the I.R.S. needs more money and a larger staff.

Another round of cuts, tax experts say, could put one of the few federal departments that pays for itself on life support. “This is an agency that has had every last drop squeezed out of it,” said Dennis J. Ventry Jr., a member of the I.R.S. advisory council and a law professor at the University of California, Davis. “I don’t know how it’s going to sustain itself.”

The White House budget office has proposed a 14.1 percent cut to the I.R.S. for the fiscal year that begins in October, reducing the agency’s budget to $9.65 billion; six years ago, it stood at $12.1 billion ($13.6 billion when adjusted for inflation).

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March 3, 2017 in IRS News, Tax | Permalink | Comments (4)

Thursday, February 23, 2017

IRS Audit Rate Of Individuals (0.7%), Businesses (0.5%) Falls To 10+ Year Lows Due To Budget Cuts

Audit (2016)Wall Street Journal, IRS Audits of Individuals Drop for Fifth Straight Year:

U.S. tax audits of individuals declined for the fifth straight year in 2016 to reach the lowest level since 2003, showing the effects of budget cuts at the Internal Revenue Service.

The IRS, which has lost 30% of its enforcement staffing since the 2010 peak, audited 0.7% of tax returns in the fiscal year that ended Sept. 30, according to preliminary data released Wednesday. That means the IRS audited roughly 1 in every 143 individual tax returns, down from 1 in 90 back in 2010.

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February 23, 2017 in IRS News, Tax | Permalink | Comments (5)

Camp & Thuronyi:  An IRS Whistleblower Could Release Trump's Tax Return To Congress Under § 6103(f)

Trump Tax ReturnsFollowing up on my previous posts (links below):  Forbes, Disclosing President Trump's Tax Returns — An Unconventional Idea, by Bryan Camp (Texas Tech) & Victor Thuronyi (former Lead Counsel, (Taxation), IMF):

Lots of folks want to see Donald Trump’s tax returns. Conventional wisdom is that the returns cannot be disclosed unless he consents. That conventional wisdom is based on the general rule contained in 26 U.S.C. § 6103(a). The general rule forbids IRS employees (and some folks who receive information from IRS employees) from disclosing “return information.” That is a term of art that means not just tax returns but also just about anything in the IRS files.

Section 6103 is a really complex statute, mostly because of the exceptions to the general rule. The exceptions are found in subsections (c) through (o). These exceptions balance a taxpayer’s privacy with the needs of government officers and employees to do their jobs. So the exceptions to the general rule can get quite gnarly.

Several commentators have begun to explore some of the lesser-known exceptions to the general rule of nondisclosure. George Yin has a nice op-ed piece that explains one exception to the general rule in § 6103: Congress can ask for Trump’s returns. Andy Grewal also explores this idea in a well-done post over at the Yale regulation blog. Both posts are worth reading.

Both George and Andy focus on the power of certain congressional committees and staff to ask for tax returns as part of their oversight function. That power is found in § 6103(f)(1) through (f)(4). Democrats have acted on the ideas in George and Andy’s blogs. Stephen Ohlemacher from the AP reports that Democrats on the House Ways and Means Committee tried to get the committee to ask for Trump’s returns, but were outvoted by committee Republicans.

But what if the returns were dumped on the committee’s lap by an IRS employee without the Committee having made a request? That could happen under the very last paragraph in subsection (f).

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February 23, 2017 in Congressional News, IRS News, Tax | Permalink | Comments (1)

Wednesday, February 22, 2017

Should New York State Give President Trump’s Federal Tax Returns To Congress?

Trump Tax ReturnsBalkinization:  Does New York State Have a Copy of President Trump’s Federal Returns?, by Gregory Klass (Georgetown):

There has been a lot of talk about the new role state attorneys general have been taking on as a check on federal overreach. ... There is something else state attorneys general might do. It is now absolutely clear that the President will not release his federal tax returns.

Any state with a copy of those returns could choose to share them with Congress.

Section 6103(f)(1) of the Tax Code gives House Ways and Means Committee, the Senate Finance Committee, and the Joint Committee on Taxation the power to request individual returns from the IRS. Representative Bill Pascrell is a member of the House Ways and Means Committee. On February 1, he sent a letter to the Chairman, Republican Kevin Brady, requesting that that the Committee obtain from the IRS President Trump’s returns. Last week Brady rebuffed Pascrell.

But there is another option. Since 1998, another subsection of section 6103 has given whistleblowers permission to share federal returns with Congress. Section 6103(f)(5) provides:

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February 22, 2017 in IRS News, Tax | Permalink | Comments (5)

Monday, February 20, 2017

Sixth Circuit Reverses IRS, Tax Court:  'Citizens Can't Comply With Tax Laws They Can’t See'

CaligulaSumma Holdings v. Commissioner, No. 16-1712 (Feb. 16, 2017):

Caligula posted the tax laws in such fine print and so high that his subjects could not read them. Suetonius, The Twelve Caesars, bk. 4, para. 41 (Robert Graves, trans., 1957). That’s not a good idea, we can all agree. How can citizens comply with what they can’t see? And how can anyone assess the tax collector’s exercise of power in that setting? The Internal Revenue Code improves matters in one sense, as it is accessible to everyone with the time and patience to pore over its provisions.

In today’s case, however, the Commissioner of the Internal Revenue Service denied relief to a set of taxpayers who complied in full with the printed and accessible words of the tax laws. The Benenson family, to its good fortune, had the time and patience (and money) to understand how a complex set of tax provisions could lower its taxes.

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February 20, 2017 in IRS News, New Cases, Tax | Permalink | Comments (11)

Saturday, February 18, 2017

IRS Suspends Guidance Due To Trump Executive Order

Sam Brunson (Loyola-Chicago), The (Near) Future of Treasury Regulations:

Today’s Tax Notes reports [No Substantive IRS Guidance Coming for a While, Official Says] that the IRS has announced that it will not release pretty much any new formal guidance (including revenue rulings and revenue procedures) for the foreseeable future. [Fn: It will continue to release routine guidance, like updated interest rates and updated mileage allowances.]

Why not? A confluence of an Executive Order and a January 20 memorandum. The EO, Reducing Regulation and Controlling Regulatory Cost, requires that, for every new regulation issued, two existing regulations be eliminated.

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February 18, 2017 in IRS News, Tax | Permalink | Comments (4)

Thursday, February 16, 2017

IRS Stealth Attack On Obamacare Should Worry Both Conservatives And Liberals

Los Angeles Times:  Trump's IRS Stages a Stealth Attack on Obamacare, by Michael Hiltzik:

The Internal Revenue Service has become the first agency to follow President Trump’s directive to start undermining the Affordable Care Act.

In a quiet rule change, but an important one, the IRS has told tax preparers and software firms that it won’t automatically reject tax returns that fail to state whether the tax filer had health insurance during the year. That effectively loosens enforcement of the ACA’s individual mandate. It appears to be a direct response to Trump’s Jan. 20 executive order requiring federal agencies “minimize...the economic and regulatory burdens of the Act.”

National Review, Refusing to Enforce the Law Is the Wrong Way to Defeat Obamacare, by Charlie Cooke:

The IRS’s willingness to ignore violations of the individual mandate should worry conservatives and liberals alike.

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February 16, 2017 in IRS News | Permalink | Comments (3)

Woman Sues Howard Stern For Airing Her Phone Call With IRS Agent Discussing Her Taxes

HIRSRadio Ink, “Hello Howard, This Is the IRS …”:

In a fact pattern worthy of a law school exam question, an IRS employee calls the Howard Stern Show and is put on hold. The IRS employee on a different line, apparently either using fat fingers on a conference call feature, or on a speakerphone, takes a call from a taxpayer while on hold with Stern. The Howard Stern Show then picks up, hears the IRS employee talking with the taxpayer and puts the nearly hour-long conversation on the air live. The law school question is … in how many ways might the Howard Stern Show be civilly and criminally liable?

The question will likely be answered by the courts. The taxpayer has sued both the IRS for violations of the Federal Tort Claims Act and unlawful disclosure of tax returns and personal information, the Howard Stern Production Company, and Stern individually, for negligence, invasion of privacy, and the intentional infliction of emotional distress.

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February 16, 2017 in IRS News, Tax Analysts | Permalink | Comments (11)

Tuesday, February 14, 2017

The IRS Scandal, Day 1377:  Republicans Still Want IRS Chief's Head

IRS Logo 2Washington Examiner, Republicans Still Want IRS Chief's Head:

Ways and Means Committee Chairman Kevin Brady, R-Texas, became the latest GOP lawmaker to call for IRS Commissioner John Koskinen's head.

"Frankly, in my view, he's the most corrupt IRS commissioner that I've ever dealt with," Brady said on Monday. He "continues … to mislead Congress, and until he's removed, I don't think the IRS will ever regain its credibility.

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February 14, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Sunday, February 12, 2017

Debate: Should Congress Heed Trump's Call To Repeal The Johnson Amendment's Prohibition On Politicking By Churches?

IRS ChurchFollowing up on my previous post, Trump Vows To ‘Destroy’ Law Banning Political Endorsements By Tax-Exempt Churches: One of His 'Least Objectionable Policies'?:  U.S. News & World Report Debate Club, Is Repealing the Johnson Amendment a Good Idea?:

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February 12, 2017 in IRS News | Permalink | Comments (1)

Friday, February 10, 2017

Brunson & Herzig:  Treasury Department Should Create Blacklist Of What Constitutes Prohibited Discrimination By Religious Organizations

Samuel D. Brunson (Loyola-Chicago) & David Herzig (Valparaiso), A Diachronic Approach to Bob Jones: Religious Tax Exemptions after Obergefell, 92 Ind. L.J. ___ (2016):

In Bob Jones v. U.S., the Supreme Court held that an entity may lose its tax exemption if it violates a fundamental public policy, even where religious beliefs demand that violation. In that case, the Court held that racial discrimination violated fundamental public policy. Could the determination to exclude same-sex individuals from marriage or attending a college also be considered a violation of fundamental public policy? There is uncertainty in the answer. In the recent Obergefell v. Hodges case that legalized same-sex marriage, the Court asserted that LGBT individuals are entitled to “equal dignity in the eyes of the law.” Constitutional law scholars, such as Lawrence Tribe, are advocating that faith groups might lose their status, citing that this decision is the dawning of a new era of constitutional doctrine in which fundamental public policy will have a more broad application.

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February 10, 2017 in IRS News, Scholarship, Tax | Permalink | Comments (3)

Saturday, February 4, 2017

The IRS Scandal, Day 1367:  White House Mum On Fate Of IRS Boss Koskinen

IRS Logo 2Newsmax, White House Mum on Fate of IRS Boss Koskinen:

The fate of controversial Internal Revenue Commissioner John Koskinen at the hands of President Donald Trump remained uncertain as of Thursday.

At the regular briefing for reporters at the White House, Newsmax reminded Press Secretary Sean Spicer numerous House Republicans recently met with Vice President Mike Pence and urged him to tell the President to sack the controversial IRS boss.

"Had Pence brought their intentions to the president and, if so, what was the fate of Koskinen?" we asked.

"I have nothing to update you on," replied the president's top spokesman.

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February 4, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Thursday, February 2, 2017

The IRS Scandal, Day 1365:  55 GOP Members Of Congress Ask Trump To Fire Koskinen

IRS Logo 2Letter to President Trump (Jan. 30, 2017):

Dear President Trump,

The consideration of the impeachment of IRS Commissioner John Koskinen in the House in late 2016 was a clear indication that Congress and the American people have no confidence in Commissioner Koskinen or his ability to discharge his duties.

The IRS, through its targeting of citizens for their political beliefs, has forfeited the trust of a free people. The IRS has admitted to improperly targeting conservative groups, delaying applications for tax-exempt status from 2010-2012, with at least 75 groups selected for extra scrutiny. Moreover, in August 2016, the D.C. Circuit Court of Appeals ruled that the IRS had yet to demonstrate that officials have definitively ceased targeting conservative groups. The ruling came at the heels of evidence that two targeted conservative groups continued to have delayed applications for tax-exempt status pending at the IRS.

Congressional investigations, hearings, and actions have shown that Commissioner Koskinen misled Congress, obstructed investigations into the IRS, and failed to comply with Congressional subpoenas. Commissioner Koskinen's willful deception and obstructionism has only further eroded any remaining confidence.

Pursuant to 26 U.S.C. § 7803, you have the authority to remove Commissioner Koskinen. We encourage you to dismiss him in the most expedient manner practicable. Such an action would restore the credibility of our Federal tax authority and the faith the American people have in their Constitutional rights to free speech and association.

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February 2, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Tuesday, January 31, 2017

The IRS Scandal, Day 1363:  The Final Chapter On The End Of My Daily Coverage

IRS Logo 2Peter J. Reilly (Forbes), IRS Scandal Daily Coverage The Final Chapter:

Last week, Paul Caron, the TaxProf, dean of the tax blogosphere, called an end to daily coverage of "The IRS Scandal" on Day 1352.  This was 552 days beyond the point that I had opined that the series had "jumped the shark". To be clear, I was not suggesting that the Prof stop covering the scandal, just that there be an occasional day here and there on which there was nothing to report.  So it just took another 552 posts for that to happen.  It is worth noting that there were more Happy Days episodes after Fonzie jumped the shark than before, so maybe it was not such a bad call on my part.

Regardless, in order to make case for shark jumping I went through the series in two posts which are here and here.  For the sake of completeness I thought it would be nice to go through the rest of the series to see how it is that the Prof managed to keep it going for over a year after my shark jumping call.  Over a year ago, on Day 943, Professor Caron indicated that he was running out of material and it might be ending soon.  Things changed on Day 984.  He had thought that it might end at 1,000, but the certification of a class action lawsuit - NorCal Tea Party Patriots v IRS  promised significant material for some time to come.

Just as a reminder.  Day 1, May 10, 2013, is where the TaxProf count starts with the headline - IRS Admits to Targeting Conservative Groups in 2012 Election. ...

Day 1024 is in a class all by itself as we learn that Donald Trump has been audited so many times perhaps because he is such a strong Christian. ...

Scattered among the days are full scale commentary pieces about the scandal.  I'm not going to give you a lot of links, but instead am putting out the three pieces that lay out the two extreme positions and a more intermediate one.  On Day 1008 in recognition of the scandal millennium (by TaxProf day count) Jennifer Kabbany wrote in the National Review one of the best summaries of the scandal true believer creed. ...

The series also contains reference to the counter narrative.  On Day 1144, we hear from Ralph Nader. ...

A more nuanced view, one that I find interesting although not persuasive, is put out by Joe Kristan. He believes what happens was a form of self-weaponization on the part of the IRS.

The self-weaponization of the bureaucracy against its political opponents is hugely depressing. The government workforce is overwhelmingly on the side of the political party that favors an ever-larger state. There are plenty of Lois Lerners in the IRS and throughout the Leviathan. The Tea Party scandal, and the complete lack of accountability for its perpetrators, gives no reason to hope those who don’t share that worldview can expect a fair shake. That’s especially true when the sitting president (referring to President Obama) shows no interest in discouraging such behavior

This view is buttressed by an entry on Day 965 with reports about federal employees giving more political donations to Democrats than Republicans.  ...

Most of the commenters on the coverage tended to support the anti-IRS narrative.  When I showed up, there would often be a brickbat thrown.  My favorite was from somebody who goes by Porkypine:

Peter J. Reilly's writings on this matter in Forbes have tended to be IRS/Administration apologias, under a thin cloak of reasonableness. Too thin to cover the way he hovers between disingenuousness and mendacity in these efforts, however.

There was one though who joined me in scandal skepticism. That is Publius Novus whose last supportive comment was:

I am a Reilly Agnostic. I too would like to see what's under the rocks. Specifically, I would like to hear testimony from LLerner after an immunity grant. And if the Republicons were honest about pursuing this mess, they would grant immunity. Why not Mr. Chaffetz?

It is interesting to note that Paul Caron himself called for Lerner immunity in a piece on USA Today which was featured way back on Day 369.  I have not had any luck in figuring out who Publius Novus actually is,  Paul Caron has told me that he doesn't know.  Joe Kristan suggested Judge Crater, a joke that was too obscure for me to get.  Well, he or she should not have any trouble finding me.

And those comments are probably an indication of one of the best things about the TaxProf's chronicle.  It took the people who follow it out of their bubbles.  It will be interesting to see whether the crusade picks up again.  I can see in the coming weeks as the practicality of the Obamacare replacement or the wall building becomes challenging, that representatives of the Trump administration and the Republican congressional majority will start pining for the days when the buck did not stop with them. Then they will recall that Lois Lerner was probably the best enemy that they ever had and the scandal will get another lease on life.

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January 31, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Saturday, January 28, 2017

The IRS Scandal, Day 1360: VP Pence, GOP House And Senate Push Trump To Fire Koskinen

IRS Logo 2Newsmax, Pence Will Urge Trump to Sack IRS Boss:

Responding to the urging of House Republicans, Vice President Mike Pence will soon call on President Trump to fire or force the resignation of controversial Internal Revenue Service Commissioner John Koskinen. Newsmax learned this Thursday afternoon from several lawmakers at the House Republican Retreat in Philadelphia. ...

Emerging from a closed-door meeting with the vice president Thursday morning at the House Republican Retreat in Philadelphia, Rep,. Chris Collins (R.-N.Y.) confirmed that the subject of sacking Koskinen was raised. "[Pence] said 'I can hear you,'" said Collins, who said the vice president "promised us" he would share with President Trump the strong belief of Republicans in Congress that "Koskinen must go."

Washington Examiner, Led by Republican Study Committee, 50 House GOPers Tell Trump to Fire IRS Chief:

A faction of conservatives is circumventing leadership brass and calling directly on President Trump to tell IRS Chief John Koskinen, "You're fired."

Rep. Mark Walker, R-N.C., will make the ask. The chairman of the Republican Study Committee has quietly but urgently been circulating a letter inside the GOP conference to build support. He's now got 50 congressmen signed onto the letter. 

The Hill, McConnell: Trump Should Replace IRS Commissioner:

Senate Majority Leader Mitch McConnell (R-Ky.) says President Trump should replace John Koskinen, the IRS commissioner who faced an impeachment vote in the House last year. “I think he’s been a disaster and I’d be shocked if we don’t have a new one,” McConnell told The Hill on Friday. ...

The Trump transition team said in December that the then-president-elect had not yet made a decision on whether to replace Koskinen immediately or allow him to serve out the remaining year of his term.

Politico, GOP Airs Old Grievances in Private Pence Meeting:

Congressional Republicans used a private audience with Vice President Mike Pence on Thursday to rehash years-old political controversies — even suggesting Pence fire the IRS commissioner, according to sources in the room.

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January 28, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (12)

Thursday, January 26, 2017

The IRS Scandal, Day 1358: More Reflections On The End Of My Daily Coverage

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William Jacobson (Cornell), TaxProf Ends Daily Coverage of IRS Scandals:

After 1352 days, thank you for your service, Sir.

Pepperdine Law Professor Paul Caron, also known as TaxProf at the TaxProf blog, started daily coverage of the IRS scandal(s) several years ago. The College Fix has some good background on the endeavor.

TaxProf probably didn’t think it would last this long. But once you start to cover something daily, it’s hard to stop.

After 1352 days, Tax Prof stopped daily coverage. ...

Thank you for your service, Sir.

Mark Meckler, the man behind the Convention of States movement, writes that monitoring the IRS can’t stop, TaxProfBlog stops daily blog about IRS harassment of conservative groups, so now we need to do this:

Just because Donald Trump is now in office doesn’t mean conservatives can take their eyes off the federal government.

On this blog, I’ve written extensively about the IRS’s targeting of Tea Party groups and have often linked to Paul Caron who has kept a daily update on the scandal at the TaxProfBlog. Unfortunately, his coverage has come to an end ….

…. thank you for the amazing service you provided. But in the meantime, we can’t let up and allow this corruption to go unpunished and allow the tax agency to walk away free from its responsibility. Trump vowed to remove corruption from Washington, and we look forward to watching him make good on his promise.

I agree with Glenn Reynolds at Instapundit who wrote, “There hasn’t been sufficient accountability for the IRS’s gross misbehavior here, but I think that Caron has done a tremendous service by keeping the issue alive for so long. I remain deeply disappointed at how many of his fellow tax professors criticized him for doing so, because they didn’t want Obama and the Democrats to look bad.”

We must stay the fight.

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January 26, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, January 24, 2017

The IRS Scandal, Day 1356: Reflections On The End Of My Daily Coverage

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Peter J. Reilly (Forbes), TaxProf Calls An End To Day By Day IRS Scandal Coverage:

Paul Caron, the TaxProf, dean of the tax blogosphere has called the end of an era.  We were all distracted with the inauguration, an admittedly important even, but given the number of peaceful transitions of power we have had since 1800, well 1860 anyway, not really that remarkable.  Professor Caron declared that he was ending daily coverage of the IRS scandal with Day 1352.

His announcement is particularly meaningful to me. Check out the lead paragraph:

In response to inquiries from Peter J. Reilly (Forbes) and Brian Leiter (University of Chicago Law School), I previously discussed when I would stop my daily coverage of the IRS Scandal.

Professor Caron explained

My answer is the same as it has been throughout the scandal: I will stop when the daily commentary in the press and blogosphere on the scandal (from both the right and the left) ends. At several points in the scandal, as I was running out of content, a new chapter would unfold and my daily coverage would continue.

At any rate, his mention of me in this context gives me a sense of having really arrived in the tax blogosphere after over seven years since my very first post. ...

I remain the last IRS scandal agnostic. Frankly, I don't think you needed a big conspiracy to account for the IRS getting its works gummed with exempt applications from groups calling themselves a party but claiming they were mostly not political.  On the other hand, both Joe Kristan and George Will think there is a scandal and that is a tough pair to be dismissive of. ...

In October 2015 I wrote two posts in which I indicated that the quality of the TaxProf's series was being diluted, by the addition of extraneous matter. ... The core scandal had been about difficulties processing applications for exempt status. Conservative groups were not getting their exempt status revoked for single statements.

There were quite a few strands of stories that were legitimately connected to the core scandal. Lois Lerner's emails, the congressional investigations, emails lost on servers, how quickly Koskinen moved the investigation on are examples. But extraneous material started creeping in. ...

It seems that the IRS Scandal even more than usual is something that is viewed through ideological glasses. ...

I reached out for some comments on the closing of the day by day scandal coverage.  Joe Kristan refereed me to his post, which ironically became Day 1353.

Thanks to TaxProf Paul Caron for staying on this undercovered story. The IRS and Lois Lerner admitted the targeting on Day 1. People have been trying to walk that back ever since, either by moving the goal posts (“the President was never implicated”) or by pretending the targeting never happened. The tax agency taking on itself the task of targeting political organizations is scarier than it doing so at the bidding of the White House.

Now we wait to see whether the new President will disarm the IRS, or wield it.

Robert Flach, the Wandering Tax Pro wrote me:

I did not follow the professor's coverage. I agreed with you that he "jumped the shark" way back. I felt he was truly beating a dead horse.

I personally strongly oppose the Tea Party and the religious right - but I am also no fan of the Commissioner and felt he mismanaged the IRS. ...

Paul Streckfus of the EO Tax Journal wrote me:

It's probably time, even if Lois Lerner is the gift that keeps on giving. What's interesting is whether Trump wants to keep the scandal alive. The wild card is the House Freedom Caucus. They probably expect Sessions to open another investigation of Lois Lerner. If so, Caron may have stopped his countdown too soon!

The scandal has really devastated the IRS exempt function.  The groundwork for the next scandal has been laid in this one. The next scandal will be about how nobody is watching exempt organizations creating a playground for scoundrels.

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January 24, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)